Understanding Term Life Insurance
Planning for the future can be a daunting task. Preparing a budget that allows you to save money and provide for your dependents may seem downright overwhelming when you take into account college tuition, mortgage payments or retirement costs. Protecting your loved ones in case of unplanned tragedies is very important – and that's where term life insurance can help.
Term life insurance is simply an insurance policy that offers coverage during a set number of years, ranging from five to 30. In the event premiums have been paid and an insured individual passes on within the specified period, the policy will pay a pre-set death benefit. And since the insurance is for a limited period and accrues no cash value, premiums tend to be lower for the specified amount of insurance.
For those looking for many benefits with affordability, level premium term insurance might be your best option. This plan is one of the most affordable types of insurance coverage available, with a premium that remains guaranteed at the same amount throughout the duration of the policy. It is easily payable in monthly, quarterly, semi-annual or annual increments.
When your policy comes to the end of its term (usually 5, 10, 15, 20, or 30 years after you purchased it), many insurance providers will give you the option of renewing your policy. Be aware that you'll probably face higher premiums, since you'll be older and a higher risk. Age is an important factor in assessing the cost of a premium.
If you want a new policy in the future, you'll have to take another medical exam and update your health status, lifestyle and family history to show you're still insurable. If you're living a healthy lifestyle and your risk level is low, you could re-qualify at a reasonable rate.
Before opting for a term life insurance policy, carefully consider the length of time for which you'll need coverage. If there is a possibility that you'll need coverage for a period longer than 30 years, term life insurance may not be your best option. However if your needs are definitely for a period of time less than 30 years, term life is a good choice for you.
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